Earnings Call: Q2 2021

Aug 11, 2021

Thank you very much, and good morning, everyone. It will be me presenting as well as Andreas Oden, our CFO. Alastair will give you on Slide 2 an update with Filthorn at a glance. We are now 20 gaming studios that are working very much collaborative and creating operational synergies. We will come back to that later. We also have built a portfolio that This growing and evolving that is typically characterized with low end users and long life cycle games. We are approximately We're over 1200 employees in our different offices, which you can see at red dots on the lower right corner of the Slide number 2. We have a record level of users playing our games. They are now 67,000,000 Monthly unique and 13,000,000 daily uniques. And our main markets are U. S, Germany, MENA region, U. K. And Canada, you can see the distribution of our revenues also on the lower right corner. So North America is slightly up to 54%, Europe 29%, Asia is likely up to 11%, which are our main areas. Turning to Slide number 3. A few words about our game highlights in the Q2. We added 4 titles to our active portfolio, so which is now then 56 games. We have now more than 30 games in under development and in soft launch in different stages, which is the highest number ever. And that is giving us confidence that we will have the opportunities to grow not only later this year but also into several years to come. We acquired our first asset during the quarter, crushed them all, An idle RPG game, which is operated by Imperial Line and also supported by good game in marketing. We also had a successful early launch on Algon online, the mobile version that reached in a very short period 2,000,000 downloads, And we are very pleased with that, of course, and also that resulted in an increased daily active users base of more than 50%. So a very good start for admin online mobile. However, we have a bit softer performance on super free titles as a direct result of lower download numbers and which in turn is a result of a decrease in UA spend. Successful expansion of Big Farm Mobile Harvest into Microsoft Store, an interesting and promising thing. No volume so far, but we think that could be interesting in Q3, Q4 and onwards. And finally, I would like to comment on Bit Life with which has had the 4 time high here in May, and we are optimistic about what that could bring as we continue our localization and expansion of that game and also adding new updates and new content. Going to next slide, slide number 4. We recorded net revenues that were 16% higher in Q2 this year, amounting to SEK 1382 1,000,000. Also, we had an organic growth of minus 17%, which is obviously a direct consequence of that we had in Q2 last year, the exceptional intake of new user. So it's a challenging comparison. However, it's important to note that we have had a very we're very pleased with the ARPDAU, the average revenue per daily active user development since that. So It's offsetting some of the user base decline. And as it is organically plus 13%, It shows that the COVID-nineteen, towards and onwards, has been of high quality and that our teams are really good at the live ops that is so important for our business. Also very important is to note that since we have this important This exceptional comparison period, which is making things look a bit special this year as we are have been a growth company for more than 10 years. It's important or could facilitate to look at the 24 months comparison instead. And then we have had a on a pro form a basis excluding KickSight, which is a separate topic. But otherwise, we have been growing like our addressable market. So that shows that we have a quite steady development over 24 months, but of course, with a very high bump in Q2 last year. Also important in this quarter is that We had a UAC deployed representing 25% in relation to net revenues with very good profitability. So way shorter return times than the 180 days that we target. I'm we did target to deploy some 4% to 5% more than that. So that was not a That was not possible due to the IDFA challenges, but nevertheless, it's important to note that we did deploy the 2nd highest number ever. And mainly, it was super free that we couldn't market to the level that we hope for. And since they move a bit faster than other products, that is basically what is part of the development of our top line obviously. We will come back to that later in the call. Just another comment on the IDFA effect. We think that we it's really paid off that we prepared ourselves for almost a year or actually more than a year A ago, we started the preparations. We have been benefiting from that. We have been benefiting from the fact that we have a very wide market Universe and a strong market reach, many channels, many territories where we market. So that is what explains that we were able to deploy on the 2nd highest level ever, even though we have had the IVF challenges. But of course, two things we did not expect out of All this unknown territory that the IDFA change come with and that was We did expect the update of the phones from the consumers to happen earlier, just as also Apple have commented on. So that was a bit slower than we expected. And also that some of our partners, marketing partners And intermediaries saw some unexpected challenges due to this, which, of course, had an impact for us, especially that it has an unexpected impact on games and studios that normally don't work with targeting at all, such Superfuhian and others. So that, of course, had an impact. But nevertheless, it's important to note that we had our 2nd highest EUA ever and a high level 25% in relation to our net revenues. Last comment on this, looking at the graphs, you can see that we have all time high in recorded revenues, both looking at the individual quarter as well as the last 12 months, despite the fact that we also have a 8% negative FX effect in the quarter. Turning to Slide 5, Looking at our profitability, we have a very high profitability in Q2 of 35% EBIT margin, And that is obviously then driven by the fact that we didn't we were not able to deploy more than 25%, even though That is a high number of targets that we deployed some 4% to 5% more. So that has, of course, a direct correlation to the high profitability in high profit margins. We also can comment and it's important that we can conclude that we have 19% in Advertising revenues, which was a target that we set up at our Capital Markets Day in November 2019 that we should be able to be up at High teens in advertising revenues, and that's strategically important, whereas it is a perfect hedge towards volatility in market prices, and that is up from 5% last year. And we can also see that it's important to note, as we have explained and elaborated on earlier that we have a different product mix compared to 1 year ago, and that is typically that we should have a higher UA spend in relation to net revenues than we had 1 3 years ago. We think still that 28% is a representative number as we spoke about earlier in the beginning of the year. We can also see that we have an all time high in profits in absolute number both for the quarter as well as in the next 12 months. So we recorded €477,000,000 in profit only. Turning to Slide number 6, looking at our active portfolio. As mentioned, we added 4 titles. So we are now up to 56 titles in our active portfolio. The advertising booking increased, as mentioned, to 19%, mainly driven by the fact that Super 3 were included for the full quarter for the first time. Mobile bookings Steady on a 77% portion of the total revenues, up slightly from last year but very steady from Q1. And you can see that we have a significant increase in the number of users worldwide that play our games on both on a monthly basis as well on a daily basis. There were up to €67,000,000 on a monthly basis and the Dow number is up to 13,000,000. So we are pleased we are heading for the 100,000,000 user base that we would like to have in the future. We can also conclude, which is important, that our ARPAU, the monetization that we are able to do is really strong. So it's organically up by 13 And again, that is a product of good work in our studios with LiveOps and that the cohort that we were able to acquire has been of Good Quality. Turning to Slide 7. Looking at the strategy product area. Total is that representing 25% of our active Portfolio bookings. We have now 13 games in the portfolio. The bookings are declining by 17%, And that is, of course, driven by the fact that we have a much lower UA than we had last quarter, but also that we have basically lower number of users basically than we had compared with Q2 last year. It's important to note that conflict donation continues to be very, very strong for us. It's one of the most successful launches in September last year. War and Peace that was launched in Q4 2017 has continued to perform very well and a strong organic growth year over year. It's a low number, but it's an important that's a last comment on the strategy area that we are starting to see that ad bookings Where ad revenues has actually started to kick in, so we have been able to expand in absolute numbers Factor 3, but it's still only 1%, but it's important because we didn't really expect 1 year ago that we at all be able to generate ad revenues in the strategy area. But as we see now that, that is possible, And we are optimistic about that, that number can increase, and that is, of course, in line with what we our strategy to increase ad revenues. Turning to Slide 8, Simulation RPG area and action area, we can see that this is now 30% of our active portfolio. We have 26 gains with crush the mall naval action in this land is mine land added to the portfolio during the quarter. So the growth is 22% compared to last year primarily by newly acquired cycles explaining that and regarding that. The share of mobile bookings decreased actually to 59% due to that Albion Online, which is a cross platform product, have significant revenues on non mobile areas. But as we mentioned earlier, we see that their mobile portion is promising launched in the quarter. Ad bookings were steady at 5%. You can also see that we have some fluctuations and Some lowering in MAU, especially in DOW, and that is mainly explained that we had significant pushes in Q1 for Nannabits in particular that we didn't have in Q2. Turning to next slide, which is the cash flow mashup Product area, Slide 9. Now that area is representing 45% of our bookings. We had a year over year growth of 30%, which is both explained by the acquired titles, obviously, since this is our latest added product area, but also Very strong organic growth from Candy Reiter. Also, we are happy to see that Moonfrog have had A very strong first couple of months in the group, and we are already establishing several collaboration projects just to ensure that we leverage the business platform that we have. So that is very pleasing to see. And as touched upon already, SuperFree have a softer development on top line because they saw the challenges with spending as much as we planned on U. A. But the flip side of that is that they are earning more money than we expected and we earlier guided on. So Dow and Mao, as you can see, are, I will say, obviously, it's rapidly expanding as we have added Loomform that has a Significant, very high number of large user base, but then are monetizing on a lower level, But that is what we knew already. And with that, I would like to turn over to Andreas to look into some financial highlights. Please, Andreas. Thank you, Jurgen. Good morning, everyone. Just turn to Page 11, so the financial highlights of the quarter. We have a revenue growth of 16%, and it's paired with a strong adjusted EBIT margin of 35%. We did, on the cash flow, generate a record level of cash flow from operations of SEK 443,000,000. We continue to have a strong financial position with a cash balance of SEK 850,000,000 and an ungrown total shorter profile by issuing our new bond of SEK 1,500,000,000 on very attractive terms. And we have a leverage of SEK 1.56, which is around our leverage target. So the quarter, even if we have tough comps, strong underlying financial performance, we diversified our financing platform, And this creates diversity flexibility for future growth. Turning then to Page 12, the P and L, our income statement in more detail. As mentioned, revenue growth of SEK 190,000,000, so 16 percent. This was driven by acquired growth, which drove 41% of the increase. That's offset then by a negative organic growth of 'seventeen and FX movements of which creates a negative position of 8%. The acquired growth continues to drive diversified revenue generation. We have more games with both Super Free and Moon Frog contributing to the pay now for the full quarter. And we also had game labs joining in May. Whilst that is Small and not material, they still contributed. Ad revenues increased to SEK 261,000,000 or 19% of bookings. This is a key dynamics in our portfolio. And as you can see, the platform fees actually decreased with SEK 29,000,000, so 9% year over year. And that ensures that the gross profit in absolute terms increased by SEK 220,000,000, I. E. 26%. And this is driven by more ad revenues coming in. So we improved our gross profit margin by 6 percentage points year over year. And that allows us to deploy SEK 100 and The SEK 30,000,000 more, I think, 60% more of the UA in the quarter, so the 2nd highest quarter that we ever had. And this is very key in terms of the demand dynamics. We talked about this and the importance of this, and we can now see it in the financial numbers coming through. In terms of our other expenses, the increase, euros 25,000,000 year over year, a 53% increase. There's always some Seasonality in that cost position, but mainly driven by the acquisitions that had sort of fixed costs. Our staff costs increased by SEK 58,000,000 or 35 percent to SEK 222,000,000. But it's also important to note that the actual P and L impact of that net of the own were capitalized is SEK 26,000,000,000, a 32% increase. And then moving down on the P and L, so we have depreciation and So that increased by SEK 26,000,000 and that is driven by more products being amortized for the Q4, but also some depreciation, which is mainly driven by IFRS 16 and office leases. So we increased our adjusted EBIT with SEK 14,000,000, I. E. 3% versus last year. And our margins were 4 percentage points below last year, but still at 35%. We had some moving down then to items affecting comparability. We were still very busy this quarter with Two acquisitions, the main and that impacted our costs. So the main cost is related to the GameLab's acquisition, And that total was SEK 13,000,000. We did change the list and that has a charge of SEK 11,000,000. We have some continued cost optimizations in Kixai. This total cost was actually offset by any other income as well, which was due to a purchase price adjustment, which came after the measurement period, hence taken over the P and L. The PPA amortizations increased as we've seen. I mean that's driven by our Acquisitions that we made, so they increased 74% to SEK 69,000,000. And that is the main driver that our unadjusted EBIT is decreasing for the quarter. In terms of financial items, We had SEK 72,000,000 charged for the 4th quarter. The underlying interest cost is SEK 37,000,000 And then we have SEK 26,000,000, which is sort of noncash interest on our net considerations that we book each quarter. And then we had a net effect of SEK 9,000,000, which is a net effect of FX and a small earn out revaluation in the quarter. This gives us a result of the financial items of SEK 217,000,000, and we had a reported tax expense of SEK 68, and this is equivalent to the tax rate of 31%. But excluding the impact of nondeductible transactional costs, there would have been 29%. And we ended the quarter with a net profit of SEK 149,000,000. So with that, I turn into Page 13. So cash flow and balance sheet metrics. I mean, as I mentioned before, we had a record cash flow from operations of SEK 143,000,000 even if we paid tax 55,000,000 in the quarter, and we had just a small positive effect on working capital. So it's a very Strong underlying cash flow generation. We did divest just above SEK 1,000,000,000, of which this was SEK 670,000,000 related to settling all the cash earnouts that we have outstanding. This is relating to the cash earnouts for 2020. So that has all been settled, and we have no more cash earnouts going out this year. And we also acquired GameLabs, and That was SEK 189,000,000. We did invest continue to invest. So we invested SEK 149,000,000 in product development So we're at 10.8% of revenues. And we also did the 1st charge payment for the GameLab no, sorry, Crustam Mall acquisition, our first asset acquisition. We had small movements on our financing where we has approximately SEK 150,000,000 of new debt taken out. And then also, we got some payments for the warrants programs, which matured of SEK 74,000,000. But as always, cash flow is on LTM, extremely important to look at from that perspective. And here, we continue to show that we could increase Our cash flow from operations to 1.4 almost 1 SEK400,000,000 and this is an increase of SEK 670,000,000 versus the same measurement period in Q2. That's 92% increase of cash flow from operations. We still continue to invest. So we invested CHF 513,000,000 in the last 12 months in new products, new organic growth. And that increase is an increase of 60%. But here is the key sort of metrics is that we do increase our operative cash flow more than we increase our investment cash flow even if we deploy SEK 530,000,000 in the last 12 months. So our free cash flow from after product development increased with €490,000,000 or 131 percent to EUR 865,000,000. So and this has obviously been Key for us, this has enabled us, together with our ability to have different sources of financing to do great acquisitions that we have done in the past period. So underlying, strong, I would say, we have To sum up this a bit, underlying extremely good cash flows in the quarter. So as to the balance sheet, we are now at around our leverage ratio, and we are at 1.56 in the quarter, which was expected. And we did strengthen our maturity profile on our debt portfolio by issuing a new SEK 1,500,000,000 bond, which matures 2025. And we used majority of that to reduce the RCEF utilization that we have. So we have a good debt structure, which has become more diversified in this quarter. So just to summarize, underlying, even if we have Strong comps from last year. We continue to deliver growth. We continue to deliver strong cash flows and good margins. And with that, I will hand over to Jurgen. Thank you, Andreas. We are turning to Slide number 15. We decided to give a guidance for the Q3 because it is Several factors that comes in are both the still we will have in Q3, then we will get rid of the tough Comps after that, but we have the tough comps still being there in Q3. And also, we have seasonality, as always, we've had in this firm in July August. So we thought that it was good for So we explicit about what we expect for the Q3, and we expect some SEK 1,300,000,000 in revenues, plusminus SEK 25,000,000. And that is also providing us with an adjusted EBIT between SEK 375,000,000 and SEK 415 SEK1000000000. And the reason why we expect in Q3, if you look at the seasonality, it's basically what we've had most years, if not all years in this company's history. So that is very normal. What usually is that we increased the margins in Q3 compared to Q2. It's an important reason why we don't expect this this year, and that is because Both we have a different structure. So 35 is not what we expected. We deployed less in Q2. But also that we expect and see early signs on opportunities to deploy more UAA again. So we do guide on the fact that that tells you that we see that we can deploy more U. A. In Q3 than usually we are able to do. And that is a very good and very important Factor for us to be comfortable in that we see good opportunities to also compare year over year and have organic growth as we go into Q4. I will come back to that in a second. So this net revenue guidance means that we have a growth in Q3 year on year between 24% and 29%. And finally, Slide 16. We are continuing our growth journey. Our business is growing. It is tough to see the comparison as we spoke about already. We knew that already last year. We spoke about that already from the beginning of the year, But our business are performing well, we think, and also the monetization is supporting that the growth opportunities and the growth journey we have. And also if you look at the 24 months period, which is then taking away the bump of Q2 and partly Q3 last year, we had a both from the acquired studio in the last 24 months, A good very, very good contribution. They grew by 27%, which shows that we can really leverage and create synergies on our StellOps platform, but also that we looking at 24 months, we do grow our business with approximately our addressable market, which is very important, of course. And we have a stronger platform formed than ever of new games organically coming out from our existing studios now up to 30. So it has been more than tripled in 18 months. And as Andreas pointed out, we have not nearby tripled our expenses. So I think that we show that We are more efficient. We leverage what we have on the Steloz platform to both deliver new games, but also how we operate the existing games. We also have an exciting pipeline of M and A targets still there. There are still many companies that will be consolidated in this industry for the next coming years and also in the short period. So We are executing on our strategy. We are executing on our plans, and it's in large following our plans even though we have this comparison. So we are in a very good position, and we are confident that we will return to organic growth also comparison year on year As we have this comp thing out of the picture, and that means that it's the latter part of the year, then whether it's October, November or something else, it's, of course, hard to say explicitly, but we have positioned ourselves to go back to organic growth, And we are definitely in a record breaking year for Stilfron on its journey towards reaching our long term targets for 2023. So with that, we are ready with the presentation and open up for questions, please. Thank CFO. The first question comes from the line of Nick Dempsey from Barclays. Please go ahead. Your line is open. Yes. Good morning, guys. I've got 3 questions, if that's okay. So the first one, just looking at the Q3 guidance, It's difficult to pull apart the revenue into organic progress and M and A on a year on year basis. But I'm not seeing, when I Try and do that at a rate of organic decline that is sharply better than Q2. But then you're also pointing to opportunity to spend more on Which is reflected in your margin. So am I wrong on that organic calculation? Will it be better? Or will it take time For more UAC to mean more revenue growth? 2nd question, on their call earlier this week, I think Zynga Management That something similar about seeing signs of improvement in the marketing environment led them to put some more UA spend to work. Yes. You said something like that. But can you give us a bit more color on the improvement that you have been seeing? What has given you more confidence to spend more on UA? And the third question, if the IDFA effect you've been pointing to has been most impactful at SuperFree, that seems to be what you're saying, And that's not contributing to your organic growth number. Is the organic growth you're seeing in Q2 and Q3 The kind of level you always would have expected from the start of this year. Thank you for the question. So starting with organic growth for into Q3, we don't give that number. We have the guidance for the full. We will We're not reporting Q3. We will come back to that. But I think that what we always have done, and I think it's definitely one of our key strengths, is We are not, when we operate our business, divide our studios, divide our products into the organic ones and the non organic ones. That is Actually, one of the key reasons why we didn't report organic growth because when you operate again and when you have the ability that we have developed over many years to Rapidly with agility, we allocate marketing to whatever product that returns the best. Constantly, We are moving marketing money so that we get the best bang for the buck, so to speak. That means that It's not the way that we operate to say that we should, whatever it takes, increase that studio or that product, whether it's organic or not. So We'll come back obviously to report that, but it's not how we stay in the business. When it comes to the U. And so as you rightly comment or in your question like that, we have lower margins in Q3 and as I met also touched upon during my presentation is that It is for the very fact that we believe that and see early signs that UA momentum is strengthening, But it's early to hindsight, but we obviously believe that we during the Q3 will be able to deploy Higher new way levels than we usually are able to do in Q3. And that is, of course, a key component in the fact that we are confident in that we will return into organic growth also comparison year over year during Q4. So yes, we see signs of improvement definitely. When it comes to IDFA effects on SuperFree, yes, that was one of the two things that we didn't expect. Otherwise, Most other things were according to what we expected. But SuperFree not working with targeting, They shouldn't be affected very much or at all, more or less, from IDFA changes, whereas that is primarily making it harder to target traffic. So that was not what we expected. And of course, that lower the U. S. Stand there. And as we commented on, being a cash in a mash up game, they move faster In terms of when you can't stand the UA that you hoped for or expected, the revenues drops faster if you don't start to compromise with profitability, which we do not. But on the other hand, when the unit may get traction on the levels that you expect and that you can deploy with the profitability levels that we expect, The uptick is much faster than in strategy as well. So as we mentioned in the report, if we wouldn't I've had Store Mate on board during Q2 last year that grew by 60%, 70% in a very short period because they are very fast moving. If we would have had Super 3 at that point, we would have seen even higher numbers. So It's fast moving. So that was the unexpected that they had an impact on IDFA, but we are as confident, as I mentioned, that, that is a Short term problem, and then they will be able to deploy it, and they have the products, existing products as well as the pipeline for taking opportunities during the fall here. When but then again, if it's in September, October, November or December, it's of course started to be bold about. I hope that answers your question. Thank you. Thank you. The next question comes from the line of Malin Vranik from Pareto Securities. Please go ahead. Your line is open. Thank you, and good morning, guys. Just a question here on revenue guidance for SandBox and Supercellular, it was SEK 1.5 SEK 2,000,000,000 for 2021 given in December. Can you please give us an update here on how we should view the contribution for Q3 and Q4 for Sandbox and Superfood? Yes. So we have chosen not to take that at this point in time because as you know, we are launching for Sandbox the Albion Online mobile, which is We did expect and we obviously, we are encouraged on the 1st 30 days or actually 25 days, I think it is, in Q2 when they were out with 2,000,000 downloads in a very short period. So we think they will contribute. And also, We are confident that we will be able to deploy more U. A. On SuperFree, and that will have a quite Swift impact on top line, but the profitability is significantly higher on Superfrees since we didn't deploy that. So we think It's not it's more important for the understanding of Stifel to guide on the full Q3 for the full group Rather than just taking out SuperFree and Sandbox, we will come back to that as we are approaching the year end. But at this point, we think it's more important to see that, especially as we are seeing opportunities coming now and into Q4 for both these entities. All right. Thank you. And another question. On the mobile advertising market environment, You expect to have a short term negative impact. How do you define short term? And why do you expect it to be short term? If you can give some Hopefully, you are here would be helpful. Thanks. I mean, You mean on the opportunities to market our products or the ad revenues we have or both? The mobile and market to U. S. Spend. Again, we have definitely leveraged the fact that we have a very strong market reach, many channels on in many territories in a way that few other of our peers, I think, could match. And that is the explanation why we are on the 2nd highest level ever during the IDFA change. So but I'm completely open with that. We had hoped to deploy maybe 4% more than we did, but we did reach 25% in relation to net revenues. The reason why we are quite confident is that The intermediaries that had some problems that were then affecting super filling the casual game Part of our portfolio, which we didn't expect, will have that short term. We are confident that these intermediaries, they're very particular and specific Challenges that they have had that they will not be there more than a few months. So and that is, of course, because we are in dialogue with them. And also, we see, as I touched upon in the last question in relation to the last question that we see On the on other areas that we are picking up, it's early signs, but we do pick up and see but some other channels are also improving here in as we speak. So we think all in all, we have a good basis and a good Opportunities to market, that's why we have the guidance we have, both in Q3, but So even more importantly, at the end of Q3, so that we fuel our top line into Q4 and onwards and hence, reach organic growth. Thank you. The next question comes from the line of Oskar Eriksson from Carnegie. Please go ahead. Your line is open. Thank you and good morning, Jurgen. Good morning, Andreas. A couple of questions from me. Starting here with Facebook and Adtal. Just to be very clear, Facebook's challenges And changes here, the main reason for the more challenging top line out of the proscippy games. And was this surprise complete surprise? And also a follow-up on that, what has changed for these user acquisition intermediaries as you see it into Q3 and Q4? Thank you. Yes. So it has been a that is correct that intermediaries like Facebook has been the main explanation. But they are We see improvements already, but it's I'm not we are not we shouldn't make predictions about Facebook, I think. It's not our role, but we see improvements already. So we are confident that, that is short I'm the servant. And the fact that, that started later since the conversion into Ios 14.5% and 14.6% and now 14.7% came later than both Apple and ourselves and Facebook expected. That didn't add to getting the adjustments in place faster. So basically, it's a bit delayed And they have seen some challenges, which becomes our challenges. But I would be I mean, It's a very far fetched idea to think that these problems will not be fixed very shortly, and we see signs of that already. Great. That's very helpful. And I mean, when you sort of try to track The 3 camps on Facebook. It seems to have been quite stable actually despite The changes here and the poor conversion that has been reported. Is there any signs of lower CPMs In the Facebook channel? Or should this mainly relate to improved predictability and improved algorithm for the whole Facebook side? I think it's very much an algorithm thing. So the algorithm has in acting in a way which has been they have been unstable in the way that you get it's not a structural increase of CPIs for us. So actually, the CPIs have been quite steady. But the thing is that when you scale something through that channel, All of a sudden, it's not following the usual pattern because there's something in the algorithm That is not working as it's done previously. So it's more that we don't know how much volume we didn't know in Q2 And that is still things to be ironed out, how much can we deploy because when you got when we increase the volumes, All of a sudden, the CPIs were acting in our without experience, unexpected. So we have to slow down and They can push the throttle again. So it has been a bit up and down there. But again, Thanks to our market reach and our very agile allocation of marketing money, we're still up at the 2nd highest spend ever, And we have not and we will not compromise on profitability on marketing. So we are way shorter than the 100 day return on marketing that we require. And you might ask, which is part of your question, Irene, why don't you deploy more if you have a margin to the 180 days return mark. And that is exactly because if as you scale, all of a sudden it doesn't work more, then you have to decrease. And so it's much more labor intense for what our strong market peers than it used to be. And that is also the very reason if you have taken part of that. If you would have been a company only or mostly depending on a few channels in a few markets, then I would be have been concerned. We are not concerned. We have just a delay, and it took us a bit longer for the reasons that I mentioned that we expected. But I mean that's we're talking about a few months, nothing else. Perfect. And the final question from me. And I mean, I think it was struck the question on similar notes. But You guided for in December last year for SUK3 Games and Sandbox Interactive, pro form a revenue of SEK1 point €52,000,000,000 and adjusted EBITDA of €350,000,000 to €450,000,000 Is it Fair to assume that it will be hard to reach the top line guidance for the year or can a strong Q4 recovery be enough? And how about the EBITDA guidance given that I suppose spending will be increased here in Q3 and Q4? Thank you. Yes. As I just tried to answer that similar question, we think it's too early to say. So that means that it's possible to reach, but we need to see what happens Since on the profitability side, as mentioned and also written in the report, we have a higher profitability for SuperFree, but lower top line due to the reasons that we discussed. But they're also fast moving. So it's definitely Possible, I mean, we are reporting Q2. We are not reporting Q3 fully. So of course, that is possible to reach that. So we have to come back that later in the year. But we think it's more important for the understanding of Stifel from where we stand to guide for Also, we are considering only 2 of them now at this point. Great. Thanks, Juergen. I might be back with 1 or 2 questions. Thank you. The next question comes from the line of Erik Lindholm from Nordea. Please go ahead. Your line is open. Yes. Hi, Lorgan. Hi, Andreas. So looking into Q4 here and maybe into next year, Can you sort of highlight which games you expect to release here from your pipeline? And if it's sort of reliant on Your ability to deploy more UA here and the UA trends improving perhaps? Well, having a 30 product on its way out, the way this works and has always been working is that We are not the kind of company that gets and hopes and calls fingers. We are data driven. So what we do is that we Take our products to soft launch, we measure. We are data driven in our approach, and we put The dollars and the euros and the effects where it returns the best. So and it's pointless to say that It must be product 3, 5, 21, and 29 that is successful. Then of course, We are pleased to see that Agilent Line started off the 1st 25 days or 28 days or whatever it was in this good way. That is promising, and there are other products that we have higher expectations on. But again, This is a numbers game. So some of them, typically 20% will exceed our expectations, that has been the case on the side. Some of them will fail. But all in all, the wider portfolio we have, and this is the very reason why we have this explicit Portfolio theory paired with our date being data driven, amongst the 30 new products, there are products that will be successful And we'll build organic growth just as it is. We have opportunities in the existing 56 products as well. So It's not that we expect any kind of miracle to happen in October or so. We think we are confident in the fact that With the things we have, with the capability of marketing, we possess the market reach we have. We are in a good spot So also we caught on 12 months comparison growth. On 24 months, we have never left that at this point. So That is my answer to that. All right. And a bit of a different topic, but What sort of impact have you seen on in game advertising revenues into in Q2 and also into Q3 perhaps? And Have they improved on Android and dipped on iOS? Or yes, any comment on the income advertising would be helpful. So our revenues is the very reason why we took the strategic decision November 19, to have a significant portion of Addea, these were several foldings. One was that just It's a diversification in itself, and diversification is very important, obviously, for stability. But then also the major reason is that, that's a perfect hedge because To simplify a bit, but you can say that if market prices or nominal CPIs go up, it's not good for our own marketing of our products. But On the other hand, then our ad inventory that drives our ad revenues is benefited from that. And that is the in Vintage that we're very pleased to have established in almost a perfect balance in 18 months only. So In the quarter, as I said, all the CPIs have been steady. So Per inventory, it has been fairly stable, but actually increased volumes and There is also an increase of KPIs on Android because several companies have moved over more to Android then iOS due to the uncertainties with intermediaries, not the least. And that's then the CPIs has been stable or even dropped on iOS. And that is reflected also in how much we get paid for per inventory, so to speak. Then The other factor is how much inventory we have. We have increased the inventory. So we can we that's the reason why we are at the 19%, the increase in our ad revenues Even though the CPI has not spiked in any way, on the contrary, I think they're stable, but we have increased the inventory. I hope that answers your question. Yes, definitely. Thank you. And I guess looking at Storm 8 specifically, the Trend appears to have continued to be quite weak. But I mean, what gives you sort of confidence in the trend improving here? And Is there any new releases planned for Stormet? Thank you. Yes. I don't really concur with It has been weak. It has been stable, but it has stabilized. But also, it's important to note that they grew So if you compare it to last year, of course, there is a difference because they grew by 67% due to last year. So of course, If you stick to the year to year, they have declining. But if you look at the they grew very they have had Some of the months this year growing on a level that was better than I expected. Some other months, they have not been growing. They have been declining. And yet again, it's depending on what kind of return on ad spend that they present. If they're not meeting our targets, they shouldn't and they couldn't spend any more U. A. So they have been more Some months growing, some months not growing this year. And I talk sequentially now, not comp numbers because they are so very strange. So We see that the 2 main products of Store Mate will be stable for and also growing for several years to come. Having said that, to answer your second part of your question, yes, they have other products in their pipeline to be announced later on. Perfect. And just a final question from me. So this improvement that you're talking about, I mean, in deploying U. A. Here into August perhaps, Is that included for the revenue in the revenue guidance for Q3? Or should we I mean, do you expect equally hard UA A difficult QA environment into Q3? I mean, we have just given you guidance, and that is, of course, what we believe. Otherwise, the guidance would have been So but what happens is that when we see also taken into consideration, obviously, in the guidance that we gave today that we are seeing an improvement in the marketing opportunities. The way it works, if you isolate quarter for Quotri, is that that is explaining why we are guiding on at around 30% margin instead of 32% or 33% or whatever. That is because we believe that we can deploy that and that provides us not with growth. If that happens in September, Obviously, the revenues from that marketing is not net very much impacting September, but it's a very good thing for Q4 and onwards. Perfect. Thank you. Thank you. We have no further questions. So I will pass back for any closing comments. Thank you very much for dialing in this morning and listening and asking questions. So I think we conclude with that. Thank you very much everyone. Thank you for attending. You may now disconnect your lines.